For anyone new to the world of credit cards, the task of choosing the right one can be daunting. With so many different offers and options available, it’s important to know what to look for in a credit card. This comprehensive guide will help you understand the different types of credit cards and how to choose the best one for first-timers.
The problem with first-timers trying to get a credit card is that they often don’t have any credit history, which makes it difficult for lenders to assess their creditworthiness. This can lead to first-timers being rejected for credit cards, or being offered less favorable terms and conditions.
Building a good credit history comes with a large number of benefits, especially getting a loan or qualifying for lower insurance premiums.
However, for newcomers to the US, establishing your credit history can be the biggest obstacle to living a life you might have always dreamed of. Applying for a secured credit card is a good way to start building your credit score from scratch in a foreign land.
Related: Best credit cards while traveling to USA
In this article...
best credit card for building credit
There is no one-size-fits-all answer to this question, as the best credit card for building credit will vary depending on your individual financial situation and credit history. However, some general tips that may help you choose the best credit card for building credit include:
- Select a credit card with a low interest rate
This will help you keep your monthly payments manageable and avoid accruing excessive interest charges.
- Choose a credit card with a moderate credit limit
A higher credit limit may be tempting, but it can also lead to overspending and accumulating debt. A moderate credit limit will help you stay within your budget and avoid getting in over your head.
- Read the terms and conditions carefully
Make sure you understand all of the fees and charges associated with the credit card before you apply.
- Keep your balance low
Try to keep your balance below 30% of your credit limit to avoid damaging your credit score.
- Only use the credit card for approved purposes
Remember, just because it has a high credit limit doesn’t mean you should use it. Make sure you understand what purposes are approved with the credit card before you apply.
Here is a list of five credit cards that can get you started on the path of building your credit score in the US.
OpenSky Secured Visa Credit Card
The OpenSky® Secured Visa Credit Card is a secured credit card that is touted as a powerful credit-building tool in America. There is no need for a credit history/credit score to apply for this card.
OpenSky Secured Visa Credit Card is a credit card that is backed by a deposit. This deposit is used as collateral for the credit card and it is held by the issuer. The OpenSky Secured Visa Credit Card has a number of benefits including:
- No credit check is required to qualify for the card. This makes it an ideal option for people with bad credit or no credit history.
- There is no annual fee.
- The interest rate is relatively low.
- The credit limit is based on the size of the deposit.
- It can help to build or rebuild credit.
- It can be used anywhere that accepts Visa.
The applicant is allowed to define their credit limit by paying the refundable deposit, which could range from $200 to $3,000. Your credit report is submitted to the 3 major bureaus, Equifax®, Experian®, and TransUnion®, each month to help you improve your credit score quickly.
First Progress Platinum Prestige MasterCard Secured Credit Card
First Progress Platinum Prestige Mastercard is my recommendation for newcomers to the US. One can get this card with a minimum credit score or no credit history at all. Flaunting an APR of less than 10%, paying back the balance becomes easier in case of a cash crunch.
These benefits and features include a low annual fee, a competitive APR, and a rewards program. Additionally, the card offers a credit limit of up to $5,000 and does not require a security deposit.
Just like OpenSky, the credit report is submitted to all three major bureaus each month.
The First Progress Platinum Prestige MasterCard Secured Credit Card is a great way to build or rebuild your credit. The card offers a low annual fee and a competitive APR. You will also earn rewards points for every purchase you make.
The biggest downside to this card is that it requires a security deposit equal to your credit limit. This can be a drawback if you are trying to improve your credit score and don’t have the extra cash on hand.
The card offers a low annual fee and a competitive APR, and requires a security deposit equal to your credit line. You’ll also enjoy a number of other benefits, including:
- No annual fee
- Competitive APR
- Requires a security deposit equal to your credit line
- Access to a higher credit line after making your first 5 monthly payments on time
- Fraud monitoring and text alerts
- MasterCard Platinum benefits, including travel and entertainment discounts
Capital One Secured Mastercard
Capital One® Secured Mastercard credit card is one of the most popular choices for new immigrants to the US. There are no annual fees or foreign transaction fees. Based on your creditworthiness, new cardholders are required to pay $49, $99, or $200 as a security deposit.
The Capital One® Secured Mastercard® is a great option for people with bad credit or no credit history. It requires a security deposit, which is used as your credit line, and has a low annual fee. You can use your deposit to build your credit score and improve your credit history. The card also offers a few perks, like 24-hour customer service and fraud protection.
Cardholders on a tight budget are further given the facility to pay their security deposit in installments. If you have made the first five payments on time, your credit limit is automatically increased, just like any other credit card.
Deserve Classic Mastercard
Issued by Menlo Park, CA-based Deserve, Deserve Classic Mastercard is another recommended choice for newcomers to America. If your credit score lies somewhere between 650 to 850, this Mastercard credit card is for you. The card offers a credit limit of $1,500.
Deserve Classic Mastercard is a great option for people with fair to good credit who are looking to build or improve their credit score.
The card has no annual fee, and offers a reasonable APR for purchases and balance transfers. Additionally, cardholders can earn cash back on every purchase, which can help offset the cost of carrying a balance.
Finally, Deserve reports to all three major credit bureaus, which can help improve your credit score over time.
With zero deposit, zero annual fees, zero foreign transaction fees, and zero % purchase APR for 6 months, this card is highly popular amongst temporary residents and international students. What makes the card further desirable is the fact that there is no need to apply for a social security number (SSN).
Both cards require a security deposit, but the minimum deposit for the Deserve Classic Mastercard is $200 while the minimum deposit for the Capital One Secured Mastercard is $49, $99, or $200, depending on your creditworthiness.
- The Deserve Classic Mastercard has a higher APR than the Capital One Secured Mastercard.
- The Deserve Classic Mastercard has no annual fee, while the Capital One Secured Mastercard has a $39 annual fee.
- The Deserve Classic Mastercard offers cash back rewards, while the Capital One Secured Mastercard does not.
- The Deserve Classic Mastercard does not have a foreign transaction fee, while the Capital One Secured Mastercard has a 3% foreign transaction fee.
Citi ThankYou Preferred
Citi ThankYou Preferred is a credit card that offers a variety of benefits and features to its users.
For starters, it offers a competitive rewards program that allows users to earn points on every purchase they make. Additionally, it comes with an introductory APR offer and no annual fee, making it a great option for those looking to save money on interest and fees.
Finally, Citi ThankYou Preferred also offers a number of perks and benefits such as travel and shopping discounts, as well as access to exclusive events and experiences.
If you are someone seeking the thrill of going out regularly, Citi ThankYou Preferred is one credit card you cannot afford to miss. The reason Citi ThankYou Preferred becomes a must-have for diners or daters is that on every entertainment and dining purchase, it earns you a good amount of points, with a low intro APR and no annual fees.
The cardholder can redeem these points by making purchases at Amazon.com, BestBuy.com, and more.
Although there are a number of options for credit cards to build your credit score in the US, newcomers are advised to opt for one of the above-mentioned cards from reputed companies.
How can I use a credit card to build my credit?
There are a few ways to use a credit card to build your credit. You can use it to make small purchases and pay them off quickly, or you can use it to make larger purchases and pay them off over time. You can also use it to transfer balances from other high-interest accounts.
What are the best credit cards for people with bad credit?
The best credit card for people with bad credit will vary depending on the individual’s financial situation and needs. However, some good options for people with bad credit include secured credit cards, which require a deposit that serves as collateral for the credit line, and unsecured credit cards for people with bad credit, which may have higher interest rates and fees but do not require a deposit.
How to build your credit history?
The best way to build credit depends on your individual situation. However, some general tips on how to build credit include paying your bills on time, maintaining a good credit utilization ratio, and diversifying your credit accounts.